6 Things You Must Consider When Buying Life Insurance
Posted on Monday, January 29th, 2018 | By IndusInd Bank
Most of you would have a brief idea or have at least heard about life insurance. It is considered as one of the best ways to secure your loved one’s future. In the past few years, the concept of life insurance has evolved from the traditional plan of insuring the family’s future to being a great investment option too.
Although all the information about insurance policy is present on the Internet to help you buy a good insurance policy, too much of data may leave you bamboozled. And in the ensuing confusion, you may settle with a good enough choice. But why be complacent with a good choice when you can avail the best option? Here, we will get things sorted for you to understand the top 6 things you should consider before buying a life insurance policy.
1. Your life-stage and desired coverage: The first point to consider is your life-stage, that is, whether you are single or married. Responsibilities change and increase with every life-stage. If you are unmarried, then you may have only your parent’s responsibilities, or not even that for some, whereas a married person has a family to look after.
Another factor is the number of earning members in the family. Some families have two earning members, while in some families there is a single bread earner. Moreover, your insurance policy should take care of your liabilities like home loan, children’s education, and marriage. You must opt for a plan that is specific to your requirement.
2. Goodwill of the insurance company: The insurance company’s goodwill or market reputation is another important aspect that you should consider. The company should have a positive feedback in the market. You should thoroughly research about the company’s products and customer services before making the decision. You can read company’s customer service reviews on online forums and social networks. Claim settlement ratio is another parameter to judge the goodwill of the insurer.
3. Financial track record of the insurance company: By buying a life insurance policy you want to financially secure your loved ones. So opting for an insurance company with a strong financial track record is a very important factor. Only a company which has strong roots can help you give your loved ones a stable and secure future.
4. Easy claim settlement: The ultimate aim of life insurance is to provide the promised claim amount to the insurer’s family without much hassle. So before zeroing on the insurance policy, check the company’s claim settlement ratio on IRDA’s official website and also read about their insurance claim procedures. But before you make any opinion, check out the reasons for rejection of specific cases.The regulator also captures the average turnaround time taken by each insurer to settle a claim.
5. Riders: There is no single policy that can meet all requirements of every individual. Companies have custom-made policies suiting the requirement of different customers. These add-on offers are known as “Riders”. Riders help you provide necessary finances in case of any emergency. These add-ons include medical treatment of critical illness, income benefit, death due to accident etc. The riders are like extra toppings over and above a base plan (additional toppings over a pizza) they are not very expensive but can surely add meaningful benefits if opted.
6. Borrow against life insurance: Although life insurance ensures financial security to the insurer’s family, it also has various other benefits like tax benefit. You can even enjoy loan against your life insurance policy. Anyone can have a financial crunch and that is when this investment can come to your rescue. Remember, you can get a loan only against traditional life insurance, i.e., on endowment and money-back policies. Other policies do not have the benefit of borrowing funds.
Before you purchase an insurance policy you have to be sure it is a perfect insurance plan matching your requirements. There are various types of insurance plans to meet your requirement, such as term insurance plan, whole life insurance plan, endowment plan, ULIP and Money back plan.
Talk to your financial advisor prior to entering into any contract with the life insurance firm. Second opinion never hurts but can save you from regretting later. Life Insurance acts as one of the most important pillar to a sound financial plan. It can eradicate the contingencies provide one has closely considered the liabilities and responsibilities one has.
Since life insurance includes insuring your loved one’s future you do not want to be wrong with the insurance policy, keep these points in mind before investing in a life insurance plan and enjoy a stress-free and happy life.